Court denies mayor’s bid to delay bankruptcy auction of 5,000 rent-stabilized apartments
New York City Mayor Zohran Mamdani received an early legal setback on Thursday when a federal bankruptcy judge blocked his administration’s effort to delay the sale of thousands of rent-stabilized apartments owned by the real estate firm Pinnacle Group. The rejection came just days after Mamdani took office, complicating his central campaign promise to aggressively protect affordable housing and penalize negligent landlords.
Mamdani’s First Housing Action Denied
Hours after his January 1 inauguration, Mamdani instructed the city’s law department to intervene in the bankruptcy proceedings of more than 90 buildings with a combined 5,100 rent-stabilized apartments. The properties had fallen into severe disrepair under Pinnacle’s ownership, with thousands of housing code violations. The company declared bankruptcy in May 2025 after defaulting on loans totaling more than $560 million.
City’s Legal Argument and Creditor Status
Mamdani’s administration argued that the city should have legal standing to intervene because Pinnacle owes the city’s housing agency roughly $12.7 million in unpaid fines for housing code violations. The administration sought to delay the sale to give the city time to assemble an alternative solution that would preserve the affordable housing stock.
Judge Rejects City’s Motion
U.S. Bankruptcy Court Judge David Jones rejected the city’s motion on Thursday, finding that the city did not have sufficient legal standing to intervene in the bankruptcy proceedings. The ruling cleared the path for a $451 million auction bid from Summit Properties USA to acquire the portfolio. City officials immediately stated they are assessing further options to influence the outcome.
Campaign Promise Meets Court Reality
The early setback highlighted the tension between campaign rhetoric and judicial restraint. During the mayoral race, housing advocates warned that New York’s rising rents and housing costs are hurting low-income residents and increasing homelessness. Mamdani visited a Pinnacle building in Flatbush on inauguration day itself to meet with tenants and criticize living conditions in the buildings.
Pinnacle’s Business Model and Tenant Complaints
Pinnacle Group, owned by billionaire Joel Wiener, controls roughly 140 buildings and about 9,000 apartments across New York City according to court filings. Tenants organized citywide, complaining that Pinnacle had poorly maintained properties and failed to make necessary repairs. Real estate industry advocates countered that New York’s 2019 rent protection lawswhich prohibited landlords from removing units from rent stabilization or raising rents on vacant unitshad made it financially unviable for owners to properly maintain entirely rent-stabilized buildings.
City Deputy Mayor Pledges Continued Fight
Leila Bozorg, the city’s deputy mayor for housing, said officials are assessing options following the ruling. We will continue to fight to ensure any owner of this portfolio makes necessary repairs to bring the buildings up to code and respects the rent stabilization regulations, she stated. Read more about Mamdani’s first housing defeat from Gothamist.
